Group outlook for 2010 confirmed: growth in sales and earnings expected

Munich, 4 May 2010 - The technology group The Linde Group has made a good start to the 2010 financial year. It achieved significant increases in sales and earnings. "It looks as if the worst is behind us. Towards the end of the first quarter in particular, we noticed a marked revival in demand," said Professor Dr Wolfgang Reitzle, Chief Executive Officer of Linde AG. At the same time, he confirmed the Group's forecast: "Given current economic predictions, we expect a higher level of Group sales and Group earnings in the 2010 financial year than in 2009. Achieving a faster rate of growth in Group operating profit than in Group sales remains our goal. The measures we have taken to ensure sustainable improvements in productivity, which are having an increasing effect, will continue to contribute towards this goal."

In the three months to 31 March 2010, Group sales rose 7.4 percent compared with the prior-year period to EUR 2.894 bn (2009: EUR 2.695 bn). After adjusting for exchange rate effects, the increase in sales was 3.9 percent. Group operating profit* grew at a faster rate than sales, by 19.1 percent to EUR 641 m (2009: EUR 538 m). The Group therefore improved its profitability, achieving an increase in Group operating margin from 20.0 percent to 22.1 percent. It should be noted here that restructuring costs of EUR 20 m were recognised in the first quarter of 2009.

Earnings before taxes on income (EBT) rose to EUR 283 m, a significant increase (66.5 percent) over the figure for the first three months of 2009 of EUR 170 m. Earnings after tax in the first quarter increased by 66.4 percent to EUR 213 m (2009: EUR 128 m). Earnings attributable to Linde AG shareholders were EUR 198 m (2009: EUR 115 m). Earnings per share improved as a result by 72.1 percent to EUR 1.17 (2009: EUR 0.68). On an adjusted basis, i.e. after adjusting for the effect of the purchase price allocation in the course of the BOC acquisition, earnings per share rose to EUR 1.41 (2009: EUR 0.99).

Gases Division

The market stabilisation in the global gases industry which began in the second half of 2009 was reinforced in the first quarter of 2010. The main contributory factor here was increasing demand from the emerging economies, where Linde is very well-positioned.

Against this background, Linde achieved an 8.5 percent increase in sales in the Gases Division in the first three months of 2010 to EUR 2.340 bn (2009: EUR 2.157 bn). On a comparable basis, i.e. after adjusting for exchange rate effects, changes in the price of natural gas and changes to Group structure, sales rose by 3.9 percent. Operating profit improved by 14.5 percent to EUR 625 m (2009: EUR 546 m). As a result, there was a significant increase in the operating margin in the Gases Division of 140 basis points to 26.7 percent (2009: 25.3 percent). The main reason for this increase in profitability was the positive impact of HPO (High Performance Organisation), the integrated concept designed to achieve sustainable process optimisation and improved productivity.

Business performance in the various regions comprising the Gases Division illustrates the regional differences which underlie general economic trends. Whereas the economic recovery is still fairly weak in the mature economies, some of the emerging economies were able to achieve double-digit growth rates once more.

In the Western Europe operating segment, Linde achieved a 3.7 percent increase in sales in the first quarter of 2010 to EUR 970 m (2009: EUR 935 m). On a comparable basis, sales rose 2.6 percent. Operating profit improved significantly by 11.3 percent to EUR 275 m (2009: EUR 247 m) as a result of efforts to achieve process and cost optimisation. The operating margin in this region rose as a result by 200 basis points to 28.4 percent (2009: 26.4 percent).

In the Americas operating segment, Linde achieved sales in the first quarter of 2010 of EUR 514 m, 2.6 percent above the figure for the prior-year period of EUR 501 m. On a comparable basis, sales increased by 5.9 percent. Operating profit rose 7.7 percent to EUR 112 m (2009: EUR 104 m). The operating margin was 21.8 percent, 100 basis points up on the figure for 2009 of 20.8 percent. The cost reduction and productivity improvement measures more than offset the adverse impact on the margin of the passing on of higher natural gas prices.

In the Asia & Eastern Europe operating segment, Linde was able to expand its gases business considerably, as evidenced by a 17.3 percent increase in sales to EUR 502 m (2009: EUR 428 m). On a comparable basis, the Group also achieved double-digit growth in sales in this region (12.3 percent). Moreover, operating profit improved significantly, increasing by 20.2 percent to EUR 155 m (2009: EUR 129 m). The operating margin was 30.9 percent, above the high level achieved in the first quarter of 2009 of 30.1 percent. These quarterly results not only demonstrate the good business performance of our joint venture activities in Asia, but also the positive impact of HPO.

In the South Pacific & Africa operating segment, Linde achieved sales in the first quarter of 2010 of EUR 375 m. This was a 21.4 percent rise compared to the figure of EUR 309 m achieved in the first quarter of 2009. However, this increase was due solely to positive exchange rate movements in the Australian dollar and South African rand. On a comparable basis, sales in the reporting period were 3.9 percent below the figure for the first quarter of 2009. Operating profit improved by 25.8 percent, also as a result of exchange rate effects, to EUR 83 m (2009: EUR 66 m). The operating margin rose as a result from 21.4 percent to 22.1 percent.

Business trends in the various product segments of the Gases Division confirm the good start made by The Linde Group to the 2010 financial year. In the on-site business, where Linde supplies industrial gases from plants situated directly on the customer's site, there was sales growth in the first quarter of 10.3 percent on a comparable basis to EUR 569 m (2009: EUR 516 m). In the liquefied gases business, Linde achieved an increase in sales of 5.2 percent on a comparable basis to EUR 569 m (2009: EUR 541 m). On a comparable basis, cylinder gas sales remained virtually constant at EUR 937 m (2009: EUR 937 m). The Healthcare or medical gases product segment continued to show steady business trends, achieving sales of EUR 265 m, 2.7 percent above the figure for the first quarter 2009 of EUR 258 m.

Gases Division - Outlook

Linde's original target for the gases business has not changed. The Group wants to grow at a more rapid pace than the market and to continue to increase its productivity. In its on-site business, Linde can fall back on a full project pipeline, which will make a greater contribution in 2010 due to the start-up of numerous plants during the year. In the liquefied gases and cylinder gas business, demand is expected to rise. In the Healthcare segment, Linde anticipates further growth in the current financial year.

Based on these factors and given current economic forecasts and the Group's business performance in the first quarter, Linde continues to expect an increase in sales and earnings in the Gases Division in the current year 2010. The Group also assumes that this year it will be able to exceed the record operating profit achieved in the gases business in 2008.

Engineering Division

In its international plant construction business, Linde noticed a slight increase in demand in the first quarter of 2010 in the four major product segments: olefin plants, natural gas plants, air separation plants, hydrogen and synthesis gas plants. This had a positive impact on order intake in the Engineering Division. In the first quarter of 2010, Linde recorded total incoming orders of EUR 502 m, nearly double the figure achieved in the prior-year period of EUR 285 m.

Sales in the first quarter of 2010 of EUR 517 m were slightly down on the figure for the first three months of 2009 of EUR 549 m, whereas operating profit improved by 13.3 percent to EUR 51 m (2009: EUR 45 m). The operating margin rose from 8.2 percent to 9.9 percent, again exceeding the target margin of 8 percent.

The order backlog at 31 March 2010 was EUR 4.281 bn, exceeding the very high order backlog at 31 December 2009 of EUR 4.215 bn.´

Engineering Division - Outlook

Growth in investment in the international construction of large-scale plants is expected to come primarily from China, India and the Middle East during the remaining part of 2010. At the same time, given the continuing economic uncertainty, it is still likely that the award of some projects will be postponed.

The high order backlog of more than EUR 4 bn provides a good basis for a relatively stable business performance over the next two years. Linde is expecting sales in the Engineering Division in the 2010 financial year to be at least at the same level as in 2009. The target for the operating margin remains at 8 percent. Linde is well-placed internationally in the plant construction business and will continue to benefit from the structural growth drivers energy and the environment.

To coincide with the publication of the quarterly financial statements, a teleconference for analysts will take place today at 8am (German time) in English with Georg Denoke, CFO of Linde AG. Journalists will have the opportunity to listen to the conference live by dialling +49.69.589.99-0509. Please tell the operator your name and the name of your company. Following the teleconference, you will be able to hear a recording of the event by calling +49.30.726.167-224. Please give the following reference number: 862439.

The Linde Group is a world leading gases and engineering company with almost 48,000 employees working in more than 100 countries worldwide. In the 2009 financial year it achieved sales of EUR 11.2 bn. The strategy of The Linde Group is geared towards sustainable earnings-based growth and focuses on the expansion of its international business with forward-looking products and services. Linde acts responsibly towards its shareholders, business partners, employees, society and the environment - in every one of its business areas, regions and locations across the globe. Linde is committed to technologies and products that unite the goals of customer value and sustainable development.